under normal circumstances, I believe the entire transaction is terminated and a rollback will occur
i'm not certain, but if the application goes down, the tran may remain open as sql is waiting for it to finish, possibly blocking other processes until that happens.

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But if you can, you still want to roll it back yourself. Transactions cause locking and it may take sql server some time to notice a connection was dropped before it can rollback. That means the locks are held for a little longer, which is bad.

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